Households the length and breadth of the UK are facing the worst financial crisis in forty years. The costs of basic foods, fuel and heating have reached an all-time high and many people are having to make hard choices when it comes to prioritising what they spend their money on.
One of the most expensive items on their monthly budget will be their rent. Additionally, rents themselves all across the country have risen to record highs, following a whopping twelve percent annual increase. Yet when they are already struggling to cover other essentials, such as heating and food, rent may be one thing that gets put back to the end of the queue and before very long, a huge backlog of rent arrears have accrued.
As the prices in the shops continue to rise, tenants may even start to get behind with their council tax and utility bills as well. What can Landlords do to help their tenants during this very challenging time and also protect their own income stream as well.
The first thing to realise is why we find ourselves in this situation in the first place. The world economy is still struggling to get on it’s feet from more than three years of a global Covid-19 pandemic. The situation has been made worse by Russia’s invasion of Ukraine and the resulting energy and food supply crisis. For many years now the rate of inflation has outstripped wage rises, so tenants may find themselves struggling to pay their bills through no fault of their own.
What help is available to support both landlords and their tenants.
Landlord rent guarantee insurance
Landlord’s rent guarantee insurance, also know as tenant default insurance is a popular choice for landlords who are concerned about securing their revenue stream when tenants default on their rent payments. Even if landlords have carefully vetted their potential tenants, checked all their references, and also possibly employed the services of a letting agent, the possibility of non-payment is always a concern.
Even under normal circumstances one can never predict a tenant losing their job, becoming ill or maybe even losing the main bread winner in death. But in this unpredictable climate the possibility of tenants getting into arrears with their rent is an ever-increasing risk. This may lead to the knock-on effect of the landlords themselves struggling to pay for their own living costs and mortgages.
Rent Guarantee Insurance can provide peace of mind by offering cover against the loss of rental income from tenant’s who find themselves unable to pay their rent. In many cases the extra expanse may be tax deductible against rental income. This takes a lot of stress out of the whole landlord/tenant relationship, especially when the default is due to circumstances beyond either party’s control.
Some things to bear in mind.
Landlords will of course need to obtain and check all appropriate references for each tenant or guarantor prior to the commencement of the tenancy agreement. And each insurance provider will have their own requirements that will be laid out in their policy documents so these must be checked first.
And each provider will also have their own policy limits, conditions, and exclusions, which may limit the number of missed rental payments it is permissible to claim for, and the maximum amount one is able to claim for.
Conclusion
In these very uncertain times, Landlord Rent Guarantee Insurance may be one way to take a little bit of pressure off landlords and their tenants. Landlords will have the peace of mind of knowing their much-needed income is guaranteed. And this will in turn take some of the pressure of tenants already hard pressed providing their families with food and heating.